'Why Nations Fail': Can the eurozone hang together?
'Why Nations Fail' author Daron Acemoglu compares the EU to the 13 American states pre-Constitution.
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He adds: “It would seem that a similar sort of solution might be optimal for Europe as a whole.”Skip to next paragraph
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Many, including the US, are pushing Europe to join in a stronger fiscal union, meaning especially shared powers of borrowing. But that’s not very attractive to the Germans.
“A fiscal union without a political union means that Germany and the European institutions have no say over what budget deficits, what tax rates, what spending other countries have but are ultimately on the line for their shortfall.”
The solution needs to be both a fiscal and political centralization like the US Constitution. That would share both voice and accountability along with the money.
Eventually, Acemoglu foresees that some countries will have to drop out of the union and set their dreams of greater prosperity aside for a time.
Further conversations with Daron Acemoglu, coauthor of “Why Nations Fail”:
Marshall Ingwerson is the Monitor managing editor.